Miners leave themselves open to corruption, report finds

By Adele Ferguson

US President Donald Trump described it as "draining the swamp", a political promise he made to rid business and politics of deep-seated bribery and corruption.

It could equally be applied to Australia, which has had its fair share of scandals and political capture in the past few years.

Western Australia and Queensland have been flagged as having key weaknesses in the mining approval and infrastructure project process, which is making them susceptible to corruption.

Photo: Brendon Thorne

But understanding where the risks lie can be a useful first step in tackling the problem.

Following a string of mining scandals, Australia's biggest mining states Western Australia and Queensland – which together mine more than $100 billion of minerals a year - have been flagged as having key weaknesses in the mining approval and infrastructure project process, which is making them susceptible to corruption.

A report compiled by Transparency International Australia (TIA), Corruption Risks: Mining Approvals in Australia, to be released on Wednesday, shines a light on the process of awarding mining projects – from exploration licences, mining leases to the approvals regime – that identifies the vulnerabilities and ascribes a score to the relative risks.

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The project included interviewing 47 experts from government, industry, academia and consultancies, reviewing the various acts and regulations and studying court cases and relevant published research.

The report identified a number of "high risk" areas, including light touch due diligence into the applicant and its principals and inadequate research into the beneficial ownership of the applying company.

The risk of corruption is compounded by the fact that companies aren't required to declare their track record and compliance and environmental record with jurisdictions outside Australia. It means companies with environmental breaches in countries outside of Australia can operate large mining projects in Australia. And they do. "This can be of significant concern when large mining projects are operating in areas where there are risks of impacts to ecology, biodiversity or water resource," it warns.

Political donations

It highlighted Indian mining giant Adani, citing an Environmental Impact Statement (EIS) for the Carmichael coalmine, where Adani stated it "has not been subject to any proceedings under a commonwealth, state or territory law for the protection of the environment or the conservation and sustainable use of natural resources".

Transparency International Australia says in the report there was evidence that Adani failed to comply with laws and environmental permits in India. "An investigation in December 2010 by officials from the Indian Ministry of Environment Protection and Forests into the Mundra Port and Special Economic Zone (Mundra SEZ) operated by Adani Ports found destruction of mangroves, creek systems and natural seawater flow by reclamation, and development of a township, airport and hospital without the proper environmental approvals."

With such blatant gaps in the system, it makes it easier for industry influence and political capture by mining companies. Not surprising, the way approvals are granted for large mining infrastructure projects in WA and Queensland scored "high" in terms of a vulnerability to political capture.

The report also highlights the impact of political donations, including the paucity of regulation, the role of lobbyists and the revolving door of staff between government and industry. This all leaves projects susceptible to corruption.

The 'revolving doors' and 'culture of mateship' could enable inappropriate influence to occur in the approval of State Agreements in Western Australia, and Coordinated Projects in Queensland.

Serena Lillywhite

To put it into perspective, in the past decade mining companies have made disclosed donations of $16.6 million to major political parties. But the real figures would be much higher given the "systemic loopholes" and opaqueness of the political donation system.

According to the report, of 538 lobbyists registered by the Department of the Prime Minister and Cabinet, 191 were former government representatives.

"The 'revolving doors' and 'culture of mateship' could enable inappropriate influence to occur in the approval of state agreements in Western Australia, and co-ordinated projects in Queensland," TIA's chief executive Serena Lillywhite said.

Former senior ministers from both parties have ended up heading peak lobby groups for the resources industry.

The report also raises the issue of transparency and accountability in large mining infrastructure project approvals and the amount of power granted to politicians.

"The research revealed that ministers or senior government representatives have considerable discretionary powers to make approvals and recommendations. This raises considerable concern as, when there is also a risk of industry influence, and opportunities for companies and their directors with a poor business record to operate in each state, the risk of corruption is significantly increased," the report says.

Putting the spotlight on the various cracks in the system of awarding mining licences and projects will hopefully move the country a step closer to draining some of the swamp.